After a transformative 2020, Shawview Consulting’s Brendan Shaw looks into his crystal ball and makes five predictions (plus one) on the key trends that life sciences companies need to be aware of in 2021.
If 2020 taught us anything, it is that futurists and forecasters make their new year predictions at their peril.
Every year presents new challenges and opportunities for life science companies but 2021 may be the year when the industry is in the spotlight more than ever.
COVID-19 is perhaps the first major global pandemic since the emergence of the modern life sciences industry.
This means the underlying issues the industry has faced in previous years will be subject to a new heightened level of scrutiny not seen before.
So, with that in mind, here are five external trends life science companies might need to watch this year.
1. Affordability and access to medicines
The issue of how life science companies anticipate, manage and lead on affordability and access to medicines issues has been around for many decades. It starts the list here not because it is new but because 2021 is likely to see a renewed emphasis on how companies price and supply their medicines and vaccines.
Of course, this new emphasis on affordability and access will be triggered by the rollout of COVID-19 vaccines and treatments around the world.
2020 was about developing the vaccine. 2021 will be about how to deliver those vaccines to the world’s population.
Those arcane debates that for years often happened far away from the gaze of day-to-day politics in ivory academic towers or in the stately halls of the World Health Assembly in Geneva are going to become very much more front and centre for world leaders in 2021.
National populations are going to want to be vaccinated and politicians will have to come up with answers if their peoples are forced to wait. The politics of this may get intense as people in some parts of the world watch citizens in other countries get immunised first against COVID-19 on global news services and then wonder why they themselves have to wait.
2020 was about developing the vaccine. 2021 will be about how to deliver those vaccines to the world’s population
This creates both challenges and opportunities for life science companies. For example, we have already seen several companies provide positive statements about how they will make COVID-19 vaccines affordable and announce licensing deals with commercial partners in developing countries. However, the proof will be in how global access is accomplished in a timely fashion.
The COVID-19-driven focus on access and affordability this year will be supplemented by other upcoming milestones, such as the release of the 2021 World Health Organization Essential Medicines List and the 100th anniversary of the development of insulin to treat diabetes.
2. Level and transparency of medicine pricing
There has been more attention on how companies price medicines and vaccines and the extent to which this can be scrutinised by outside parties. Examples such as the 2019 World Health Assembly resolution on price transparency and the 2020 Most Favoured Nation Executive Order issued by the Trump Administration in the United States demonstrate the growing attention of governments, payers and civil society groups on this issue.
Although such measures are potentially anti-competitive and unfair – no one asks to see the cost of goods, research costs or profit margins of an Apple iPhone when they buy it – life science companies will have to watch this issue carefully. Demands for companies and governments to publish commercial-in-confidence material are the latest manifestation of a longer-term push for transparency in a range of life science business activities including pricing, clinical trials and engagement with health care professionals.
While a variety of industries are increasingly being held to account for the way they do business – witness the scrutiny that Facebook, Google and Amazon are currently facing – some of the pressures on life science companies are unique and will require careful thought.
3. Supply and supply chain issues
This year will see the world gripped by the question of how fast life science companies can roll out vaccines and treatments for COVID-19. The people of the world are now acutely sensitised to how the industry manufactures and supplies vaccines and medicines in a way that they have not been before. There are fears that it will be a challenge for the industry to meet global demand all at once this year, a lack of manufacturing capacity being a key issue.
Getting the balance right between collaboration and competition will be critical as both have an important role to play in protecting global health
Moreover, the issue of ‘vaccine nationalism’, already a hot topic in 2020, will become more acute in 2021. As COVID vaccines become a reality it is becoming clear that some mostly high-income countries have got ahead of just about everyone else in securing the majority of the first available supplies of the vaccines. Meanwhile, the COVAX facility. an international initiative designed to equitably fund and share available COVID vaccines at a global level, has struggled to secure sufficient funds. Similar issues happened in the H1N1 pandemic of 2009. Watch through 2021 how this all plays out and influences the evolving political debate on access to medicines.
As we are seeing outbreaks of nationalism, however, we are also seeing unprecedented alliances developing between companies and between companies and other stakeholders. Again, COVID-19 is likely to spur a trend that was already underway by encouraging new partnerships and alliances not seen before. Getting the balance right between collaboration and competition will be critical as both have an important role to play in protecting global health.
The disruption to supply chains from lockdowns and border closures through 2020 also showed how dependent the world is on countries like China and India to provide active ingredients and the earlier stages of the pharmaceutical manufacturing process. Debates about ‘onshoring’ and the merits or otherwise of diversifying supply chains will continue into 2021 as the initial panic from 2020 subsides.
4. Geopolitical changes and tensions
The prominent role of China and India in supplying APIs and formulations highlights their success as a growing force in the global pharmaceutical industry prior to COVID-19. The growth in life sciences industries in these countries reflects a broader rebalancing of global economic activity back to the East.
China and India are re-establishing themselves as major centres of global economic growth and trade today, just as they were hundreds of years ago. Together both countries accounted for more than half of total global economic activity through much of the first millennium AD. Today, China looks like leading the global economy out of recession in 2021 and is set to overtake the US as the world’s largest economy by 2024. China’s swift response to COVID-19 and subsequent economic rebound is supporting this longer-term trend. Meanwhile India will become the third largest economy in the world by 2024, just behind the US.
Emerging markets in Africa, Asia and Latin America will continue to become more important in the global economy. It is just a function of global demographics and growing incomes that will continue to drive this going forward.
Against the backdrop of political disruption and change in western economies in the aftermath of the US presidential election, post-Brexit UK, debates over the future role of the EU and the place of countries like Australia, Canada and New Zealand, this global rebalancing should trigger some interesting arguments. A range of tech companies from Huawei to Twitter are examples of businesses getting caught up in these global political tensions.
With respect to life sciences, the debate in countries around the world will be how to position their respective industrial sectors in the global industry in a post-COVID world. How companies themselves engage with emerging markets will be important, an issue made more urgent in the aftermath of COVID-19.
5. ESG and the life science industry
Arguably, 2020 was the year that environmental, social and governance (ESG) issues took centre stage in global business. Businesses in different industrial sectors across the global economy confronted the growth of ESG, impact investing or stakeholder capitalism – whatever you want to call it. The notion that companies have a responsibility to serve the broader community as much as their own shareholders is fast becoming the accepted norm.
This has been triggered by major geopolitical and social issues such as climate change, environmental issues, progressive social and political agendas, supply chain integrity and the ‘Me Too’ and ‘Black Lives Matter’ movements. The upshot is that more companies across national and international economies are being asked how they are managing, responding and even leading on these issues.
How life science companies respond to this and adapt their own business models will become even more important in 2021. The growing profile of the Access to Medicines Index as a benchmark for how at least some pharma companies are performing in access to medicines issues is an example of this.
As well as developing new business models from a competitive and economic perspective, the life science industry will increasingly need to look at ESG issues. Developing and supplying medicines and vaccines to the world’s population presents both challenges and opportunities here as life science companies’ actions on things like workplace diversity, work practices, pricing strategies, access to medicines programs, environmental impact, ethical standards, authenticity, value-based brands and embracing different countries and cultures will be increasingly judged through the ESG lens.
6. Digital technologies
‘Whoa!’, you’re thinking, ‘a sixth trend? I wasn’t expecting that!’
No, and that’s the point.
At the beginning of 2020 no one was expecting a global pandemic that would cripple the world economy and no one was expecting it to trigger a digital revolution.
By year’s end, millions of people were remotely working from home, virtual online meetings became ubiquitous and empty offices became the norm.
Could we see the ‘virtual’ life science company in the future? A company with no labs, no factories and no offices?
Like other industries, the life sciences industry and its people had to pivot and adopt new ways of working. To varying degrees companies had been reluctant to embrace technology, but when nudged to do so by COVID-19 they discovered that it worked. Now, companies must grapple with the aftermath of this and think about how it affects everything from their sales rep model through to workplace culture and data management.
Like the unexpected ‘6th trend’ for this article, digital technologies have become an unexpected trend for 2021 that has now become mainstream. For years, companies have been talking about ‘adaptability’, ‘flexibility’ and ‘disruption’ and now they have to live it. Much faster than they might have thought.
Could we see the ‘virtual’ life science company in the future? A company with no labs, no factories and no offices?
Life science companies need to be aware of the broader business, economic, social and political forces that shape the external business environment around them and develop their corporate strategy in response to these forces.
This should make 2021 an interesting year!